Apple Music Karaoke Mode Musk Briefly Not Richest COVID Variants Call of Duty and Nintendo 'Avatar 2' Director 19 Gizmo and Gadget Gifts Gifts $30 and Under Anker MagGo for iPhones
Want CNET to notify you of price drops and the latest stories?
No, thank you

Exodus aims to raise $800 million

The Net-infrastructure company says it will sell 13 million shares in a secondary offering and also make available $500 million worth of convertible bonds.

Exodus Communications said Monday it will sell 13 million shares in a secondary offering and also make available $500 million worth of convertible bonds.

The two actions are expected to raise a total of about $800 million--enough to fund the company until it delivers net income in 2003.

Shares in the provider of Internet infrastructure outsourcing were off $3.19, to $20, or more than 13 percent, in early trading Monday. The company, which has been hit as its dot-com customers struggle, lost ground after a mediocre fourth quarter in which it lowered guidance for 2001.

The Santa Clara, Calif.-based company said it will use the net proceeds from the offerings for acquisitions and general corporate purposes.

UBS Warburg analyst John Hodulik noted that the offering should be just enough to fund the company's business plan through to real profitability. Although First Call expects the company to report an operating profit in the first quarter of 2002, Exodus won't break even on net income--earnings including interest, taxes, depreciation and amortization--until 2003, according to Hodulik's projections.

The company likely will use the roughly $800 million expected from the offerings to fund data center buildout and acquisitions. Hodulik noted that with demand for hosting services rising in Europe and Asia and with the company exploring entry into second-tier markets in the United States, he expects Exodus to revise its business plan to allow for the construction of more data centers.

Hodulik on Monday reiterated his "buy" rating and 12-month price target of $55 per share.

Exodus is one of many companies seeking to raise cash despite a rocky stock market. Other companies recently raising cash include Adelphia Communications, XO Communications and Intuit.

The Exodus offerings are managed by Goldman Sachs; Merrill Lynch; Morgan Stanley Dean Witter; and J.P. Morgan Securities.